World Bank to loan Egypt $400m for low-carbon freight railway

The operational bypass between Alexandria and Cairo is expected to reduce greenhouse gas emissions by 965,000 tonnes over 30 years

People walk during rainy weather in Alexandria. Egypt’s transportation sector is the second largest contributor to the country’s greenhouse emissions after energy. Reuters
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The World Bank has approved a $400 million loan to Egypt to develop a railway bypass for freight trains that will help improve and decarbonise the country’s transportation and logistics sector, the lender said on Monday.

The Cairo Alexandria Trade Logistics Development Project will allow for increased freight capacity along the congested railway corridor between the Alexandria Sea Port, Greater Cairo Area and the newly constructed 6th of October Dry Port further west.

The GCA corridor currently accommodates three freight trains per direction per day, with the rest dedicated to passenger trains. The new bypass would allow 15 container trains per day by 2030 and up to 50 trains daily by 2060.

Because transporting freight by train rather than by road has a lower carbon footprint, the bank estimates the project will reduce greenhouse gas emissions by 965,000 tonnes over 30 years.

Egypt’s transportation sector is the second-largest contributor to the country’s greenhouse emissions after energy, contributing about 19 per cent.

“This agreement will support the government of Egypt’s progress towards clean, smart transportation to reduce emissions, all within the framework of the green economy transition, while also increasing private sector participation in development efforts,” Egyptian Minister of International Co-operation Rania Al Mashat said in a separate statement.

As host of the UN climate summit Cop27 next month, Egypt has been ramping up projects and investments for its green transition.

Through its National Climate Strategy 2050, the country plans to spend $211 billion on mitigation programmes to avoid and reduce emissions, and another $113bn on adaptation programmes to respond to the impact of climate change. However, it faces a funding gap of about $250bn.

The $400m in development financing for the $998m railway project is being provided by the International Bank for Reconstruction and Development, the World Bank’s lending arm.

It has a 29-year term with a seven-year grace period, and also includes technical and institutional support for the National Railways Authority, the ministry said.

The development finance portfolio between Egypt and the World Bank includes 15 projects worth $5.7bn in the sectors of health, entrepreneurship, transport, social protection and small and medium enterprises.

Minister of Transportation Kamel El Wazir said the latest project is “aligned with Egypt’s pressing development priorities, which include decarbonisation, trade facilitation, private sector participation and gender balance in the workplace”.

One of the project’s objectives is to increase the number of containers moved by rail “from zero to 184,000 per year”, he said.

Private investors will be able to operate their trains on the national tracks by paying a fee through a new infrastructure access charging regime.

The project will also encourage female labour force participation by providing childcare options and supporting their professional development, the World Bank said.

“We hope that through supporting more job creation, including for women, a cleaner environment, and providing safer mobility, the operation will contribute towards a brighter and more prosperous future for all Egyptians,” said Marina Wes, World Bank country director for Egypt, Yemen and Djibouti.

Updated: May 12, 2023, 3:25 PM